CME Clearing Europe to Offer Collateral System With SIX

May 12 (Bloomberg) -- CME Group Inc.’s European
clearinghouse and SIX Group’s central-securities depository have
agreed to offer an integrated collateral-management service to
insurance companies operating in Switzerland.

Once the system gains regulatory approval, financial
institutions will be able to put the collateral needed to back
trades directly into CME Clearing Europe Ltd.’s account at the
Swiss company’s settlement arm. The pair will gradually extend
the service to other countries and types of investors, Robert
Almanas, managing director of Zurich-based SIX Securities
Services said in an interview on May 9.

Collateral management has become more important for
financial institutions as regulators around the world have
pushed more trading in over-the-counter derivatives through
clearinghouses in the aftermath of the financial crisis in 2008.
Central counterparties, such as London-based CME Clearing
Europe, hold collateral in the form of securities on behalf of
banks and money managers. The European Securities and Markets
Authority or ESMA is currently working on how to implement a new
set of rules called the European Market Infrastructure
Regulation or EMIR.

“The need for collateral and collateral management will
continue to grow in this regulatory environment with EMIR and
this is an opportunity for us and our customers,” Almanas said
in the interview. “Also we will expand our customer base
through CME Clearing Europe.”

The collateral-management platform will link customers with
CME’s clearinghouse and SIX’s CSD, enabling brokers and asset
managers to see how much collateral they have available to meet
margin requirements at any time, the companies said in a
statement. The system also ringfences each customer’s funds
using a process called automated collateral segregation.